PERODUA STRATEGIC MANAGEMENT

INTRODUCTIONTo conduct analysis in order to enhance Perodua market share in Malaysian & international markets.

To analyse current business using SWOT, TOWS, BCG & PORTERS Five Forces.

To make findings from the analysis where we are and where we want to be.

To make recommendations on strategic direction for Perodua. ISSUE & ASSUMPTIONSTOTAL INDUSTRY VOLUME VS PERODUA SALESType2013% market share2012% market share2011% market sharePERODUA196,07129.9%189,13730.1%179,98930%Proton138,75321.2%141,12122.5%158,65726.4%Toyota91,18513.9%105,15116.8%86,95114.5%Nissan53,1568.1%36,2715.8%32,4805.4%Honda51,5447.9%34,9505.6%32,2765.4%Others125,08419%121,12319.2%109,77018.3%BCG MATRIX?LowHighHighLowCash Usage- Market GrowthCash Generation Market Share

30%35%Currently Perodua sits in Cash Cow quadrant and going to increase share which require to spend more to sit in Star quadrant. RIVALRY AMONG EXISTING COMPETITORSThere are other existing brands with better brand perception that can rival Perodua. Rivalry is high.

POTENTIAL NEW ENTRANTSCar manufacturing has high entry and exit barriers, due to high capital requirement. Thus, potential new entrants is low.

THREAT OF SUBSTITUTESThere are other substitutes eg motorcycle, train, bus that can be a threat to Perodua. Threat is low since buyers will prefer to drive cars than take the substitutes.

BARGAINING POWER OF SUPPLIERSPerodua has 140 vendors and sourced its materials abroad. Its suppliers has moderate bargaining power.

BARGAINING POWER OF BUYERSMany options from other car makers, hence, high bargaining power from customers.PORTERS FIVE FORCES MODELSWOT ANALYSISelectronic power steering column (EPS)Perodua Myvi EZ 1.3 price 2008: RM47,781Average Resale Price 2013: RM31,0606TOWS MATRIX

7Strengths SFocuses on Malaysian marketFocuses on small passenger carsAffiliation with ToyotaAffordabilityHigh resale valueWeaknesses WLow safety standardLow qualityToo focused on Malaysian market which will become matureToo dependent on Daihatsu for upgrades

Opportunities OInvest in bigger passenger vehiclesInvest in countries that are similar to Malaysian emerging market Invest in new market for green eco carsSO Strategies(Use strengths-take advantage of opportunities) Produce cars with affordability using latest hybrid technology (S1, S2,S4,O3).Export to emerging economies countries (S2, S4, O2).Cost leadership (S4, O1).Undertake collaboration to develop better technology (S3, O1, O3).Maintain the high resale features in bigger vehicles/eco cars (S5, O1, O3).WO Strategies(Overcome weaknesses -take advantage of opportunities) Exportation (W3,O2).New development of bigger and eco vehicles (W1, W2, O1, O3).Training and development to minimise dependency on Daihatsu technology (W4,O1, O3).

Threats TCompetitors & substitutes in the marketIncrease in bank interest rate for loansGovernments reduction on import dutiesST Strategies(Use strengths-avoid threats)Cost leadership to compete in similar vehicle class (S4, T1).Increase local content to reduce production cost (S4,T2, T3).WT Strategies(Minimise weaknesses-avoid threats)Invest in training and development to avoid buyers from switching to competitors or substitutes (W1,W2,W4,T1).Invest in countries that have lax in bank interest rate and government policy to avoid increase in interest rate and import duties (W3,T2,T3).Electronic Stability Control or ESC works to prevent a car from skidding when a driver has to quickly swerve to avoid a collision. Unlike other safety features like airbags, studies have shown that ESC is the most important safety feature after seatbelts.Note that ABS does not shorten the braking distance of a car. It merely prevents wheel lock-up and allows the driver the steer away from a road hazard. ABS cannot compensate for reckless driving.Young drivers turning to families7Pareto analysisPareto analysisis a formal technique useful where many possible courses of action are competing for attention.The lengths of the bars represent frequency or cost (time or money), and are arranged with longest bars on the left and the shortest to the right. In this way the chart visually depicts which situations are more significant.

Assumption based on :

bad customer service35%Association with low quality: parts have to be replaced frequently:20%Association with low safety standard: recalling of cars:18%Competitors & substitutes in the market: 12%Governments reduction on import duties : 9%Increase in bank interest rate for loans:6% Total : 100%

Should focus on dealing with customer service, as it contribute most to the type of customer complain.Should work on providing better customer service experience at the service center as it provide the most impact on the no of complain.

8Fishbone Analysis9RECOMMENDATIONSIn order to increase market share:Upgrade production technology in order to improve efficiency and quality of the cars. Improve efficiency means ability to produce more cars with consistent quality. Maintain small car segment with up-to-date technology.Train and develop human resource.

CONCLUSIONIn the BCG matrix analysis, Perodua sits in the cash cow quadrant. It has low usage of cash but high market presence in Malaysia.

From SWOT analysis, it can be seen that the main factor that can help Perodua to boost its market share further are quality in products and service

From TOWS analysis, Perodua can be said a cost leadership company. To increase market share, it must improve on production technology and training and development which will lower cost in the long run. Perodua also needs to improve on its quality standards and customer services.

From Porters 5 forces analysis, Perodua has the competitive advantage over other local car maker. Focus on exportation.

CONCLUSIONIn Pareto analysis, the customer service should be improved as they are the frontline facing customers.In Fishbone analysis, there are six elements that seems to be able improve market share that is on people, process, Equipment Management Material Environment.